Nov. 15 (Bloomberg) -- Canadian factory sales rose a second month in September on aerospace gains while most other industries, including automobiles, declined.
Sales climbed 0.4 percent to C$49.8 billion ($49.7 billion), Statistics Canada said today in Ottawa. Economists forecast a 0.3 percent increase according to the median of a Bloomberg survey with 18 responses. The agency also lowered its estimate of August’s gain to 0.9 percent from 1.5 percent.
Factory sales have been rising from a low of C$38.1 billion set in May 2009 during Canada’s last recession on gains in automobile, machinery and lumber production geared for shipments to the U.S. Future demand from Canada’s largest trading partner is threatened by the potential for $607 billion of U.S. tax increases and spending cuts due in January, weak productivity growth and a high Canadian dollar.
“The modest increase in volumes points to the challenges faced by Canada’s manufacturing sector,” said David Tulk, chief Canada macro strategist in Toronto at Toronto-Dominion Bank’s TD Securities unit. Sales excluding aerospace were “far from encouraging,” he said.
Aerospace and parts production jumped 43 percent to C$1.76 billion, the fastest increase since a 66.8 percent gain in May. Excluding aerospace, sales fell 0.7 percent in September. That industry led a 2.2 percent rise in new orders to C$49.6 billion and a 0.3 percent decline in unfilled orders to C$62 billion.
Inventories rose 0.2 percent to C$65.2 billion, with the ratio of factory stockpiles unchanged at 1.31.
Excluding price changes, a better indicator of the industry’s contribution to economic growth, factory sales rose 0.4 percent in September.
Finance Minister Jim Flaherty this week delayed plans to balance the federal budget by one year and run larger than expected deficits as lower commodity prices and slower growth hamper government revenue.
Today’s factory report suggests third-quarter economic growth was even slower than the 1 percent annualized pace the Bank of Canada forecast last month, Krishen Rangasamy, senior economist at National Bank Financial in Montreal, wrote in a note to clients.
“The Canadian shipments report looked good on the surface but the details were less impressive,” he wrote.
The Canadian dollar added 0.1 percent to C$1.0027 per U.S. dollar at 11:43 a.m. in Toronto. One Canadian dollar buys 99.73 U.S. cents.
Sales rose in eight of 21 categories tracked by Statistics Canada, accounting for about half of production, including a 3.7 percent gain for primary metals to C$3.86 billion.
Metal is needed for projects such as the C$3 billion oil pipeline that TransCanada Corp. and a unit of PetroChina Co. Ltd. have agreed to develop to ship crude from oil-sands projects in northern Alberta. TransCanada and Phoenix Energy Holdings Ltd. will each own 50 percent of the proposed Grand Rapids Pipeline.
Automobile assembly sales fell 3.6 percent to C$4.58 billion in September, while sales from a year earlier rose 18.2 percent.
Factory sales excluding motor vehicles and parts increased 0.9 percent to C$43.3 billion, Statistics Canada said.
From a year earlier, factory sales rose 1.8 percent. Excluding the impact of price changes, sales rose 4.1 percent.
To contact the reporter on this story: Greg Quinn in Ottawa at firstname.lastname@example.org